The agreement was reached during the bilateral talks between Indonesian President Joko Widodo and his visiting Timor-Leste counterpart Jose Ramos-Horta in West Java on July 19.
Speaking at a press conference after the talks, President Widodo expressed optimism that construction of the Napan Cross-Border Post (PLBN) in East Nusa Tenggara would be completed this year.
In addition, the nations agreed to improve connectivity, both by land and sea.
The two heads of state also observed the signing of bilateral memoranda of understanding in the agriculture, transportation, and trade.
Ramos-Horta is on an eight-day state visit to Indonesia, his first foreign trip since taking office on May 20.